SBrooks154 0 Report post Posted April 16, 2019 I have noticed when trading let's say a single call with a decent amount of time left until expiration te stock will blow up not because of price but because of volatility! I have just started trading different kinds on spreads that lesson your break even point! Since then I haven't really noticed any spikes on volatility! My question is does the volitility from the call whether sell or buy offset the volitility of a put whether sell or buy! Also does a sold call and bought call cancel out volatility! I may be way off it could have just been a coincidence since I'm fairly new! Thanks for any help! Share this post Link to post Share on other sites
Yowster 9,862 Report post Posted April 16, 2019 On 4/16/2019 at 10:22 PM, SBrooks154 said: I have noticed when trading let's say a single call with a decent amount of time left until expiration te stock will blow up not because of price but because of volatility! I have just started trading different kinds on spreads that lesson your break even point! Since then I haven't really noticed any spikes on volatility! My question is does the volitility from the call whether sell or buy offset the volitility of a put whether sell or buy! Also does a sold call and bought call cancel out volatility! I may be way off it could have just been a coincidence since I'm fairly new! Thanks for any help! If your spread is using the same (or close to the same) expiration for equal number of short and long legs whose strikes are relatively close to each other - then yes, the short and long legs IV will to a large degree offset each other out and therefore minimize the effect of volatility changes. BTW, IMO this is why TV shows such as Options Action typically use these spreads when placing their directional trades, so they don't have to get into all the complexities about IV changes (since the trades are mostly directional with the largest greek impact coming from theta). Share this post Link to post Share on other sites
SBrooks154 0 Report post Posted April 16, 2019 It almost has me wanting to pay more premium to take advantage of volatility! Your max profit is also not capped you just need to find the real winners! What is the best way to adjust an iron condor! I'm hearing sell a call or put on the losing side but sometimes there's not enough premium left! I thought about doing a debit spread next to the side being comprimised! Then you are not promised it will blow through your limits! I've heard to buy out of the money positions not sure how that helps unless the price moves that far against you! What happens if you close out as soon as the price gets in the money! Do you only lose your profit instead of about 3 times your profit as is with most iron condors? Share this post Link to post Share on other sites
